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(Alliance News) - LondonMetric Property PLC on Monday said it has agreed to purchase and fund a new distribution warehouse for GBP24.0 million, reflecting a yield on cost of 5.2%.
The FTSE 250-listed property firm said the 232,000 square feet warehouse has been pre-let to Croda International PLC, a FTSE 100 chemical company, on a 20-year lease at a rent of GBP1.3 million per year.
Croda will use the warehouse as its distribution hub and will invest a "significant" amount in a "state-of-the-art" automated facility, LondonMetric said. The 33-acre site will have a very low site density, the company noted, and there is planning consent for 140,000 square feet of additional development. Moreover, construction will start imminently and is expected to complete in mid-2020.
"In this ongoing low interest rate environment, we continue to be attracted to sustainable real estate which can deliver reliable, repetitive and growing income returns," said Chief Executive Andrew Jones.
"This latest distribution investment is let to a high quality occupier who is an existing customer of ours. It benefits from a very long lease at an attractive yield that is inflation linked and will further improve the quality of our portfolio as well as offer further occupier-led development potential," added Jones.